IMF Asks FG To Introduce Tax on Fuel and Telecom Services for More Revenue
- The IMF has urged Nigeria to introduce telecom excise duties and extend VAT to fuel products
- It warned that while recent tax reforms may improve revenue collection, further policy changes are still needed
- Muda Yusuf, the Chief Executive Officer of CPPE, has provided its comments on the new advice from the IMF
Legit.ng journalist Dave Ibemere has over a decade of experience in business journalism, with in-depth knowledge of the Nigerian economy, stocks, and general market trends.
The International Monetary Fund (IMF) has recommended that Nigeria government impose new taxes on fuel and telecommunications services to increase government revenue.
The recommendation, if accepted, is expected to further increase the cost of petrol, airtime and data costs.
Source: Twitter
In its 2026 Article IV Consultation report on Nigeria, the Fund said that in order to bolster revenue generation amid spending pressure, additional fiscal reforms were required to strengthen Nigeria’s revenue mobilisation efforts.
IMF asks the government to introduce new taxes
The Fund had also encouraged the federal government to consider increasing the Value Added Tax (VAT) rate from 7.5% and closing tax loopholes in key sectors.
The new taxes, along with improved tax compliance, were projected to raise revenue by 3.9% of GDP over the medium term.
Strengthening tax enforcement and digitalisation of revenue collection processes could raise an additional 3.1% of GDP in revenue by closing leakages and informalities, the Fund noted.
However, the IMF warned that any tax increase should be appropriately timed and that Nigeria’s deteriorating levels of poverty and food insecurity made it harder for citizens to bear additional tax burden.
The fund emphasised the necessity of a well-functioning cash transfer system before the introduction of new consumption-based taxes.
Source: Twitter
New telcom tax
The federal government's attempt to introduce a 5% excise tax on telecommunications services was previously withdrawn due to opposition from telecom operators and consumers, who were of the view that it would raise the cost of communication, given the high prices already prevailing.
Telecom operators had long stated that they are often compelled to pass on any new levies to consumers via higher charges.
Labour and businesses had opposed tax increases related to fuel due to the direct increase it had on the cost of transport and food products.
However, the fund argued that, though a potential increase in export revenues and fiscal inflows due to more favourable world commodity prices might help to reduce the rate of inflation and the difficulties faced by poor households, it might simultaneously increase the cost of food.
The IMF had earlier projected the growth of the economy in 2025 to be 4% and an increase to 4.1% in 2026 despite growing pressure on the cost of living to keep its toll on economic activities in the country.
Expert speaks on IMF proposal
In a message to Legit.ng, Muda Yusuf, the Chief Executive Officer of CPPE, said it welcomes the positive assessment of Nigeria’s economic reforms but warns against pressures that will affect the livelihoods of the citizens.
He said:
"The next phase of economic management should therefore focus on converting macroeconomic gains into welfare gains. The challenge before policymakers is no longer merely one of economic stabilization; it is increasingly one of inclusive prosperity."
List of 10 African countries with lowest IMF debt
Earlier, Legit.ng reported that as many African economies grapple with mounting debt, high inflation, currency depreciation, and tighter global borrowing conditions, a handful of countries stand out for a different reason: they owe relatively little to the IMF.
With debt sustainability becoming a major concern across the continent, countries with lower IMF obligations are gaining greater flexibility to fund development projects, strengthen public services, and navigate economic uncertainty without the heavy burden of loan repayments.
Source: Legit.ng
